For MBNA, Bill Would Provide A Windfall
Positioned to gain more than any other entity from final passage of the bankruptcy reform bill is MBNA Corp., the world's largest credit card-only bank and avid purchaser of credit union card portfolios. With a loan portfolio of $100 billion and a charge-off ratio of 5.09%, MBNA stands to boost its loan collections by more than $100 million a year under conservative estimates--roughly twice as much as the entire credit union industry. Jim Donahue, a spokesman for MBNA, said about half of the $5 billion in charge-offs the company expects to report this year are due to customers filing for bankruptcy. "Those become pretty big dollars," said Fitch Investors analyst Thomas Abruzzo, about the MBNA stake in the bill.
By comparison, the entire credit union industry, with a charge-off ratio less than a tenth of MBNA's, is projected to boost its collections from the bill by less than $50 million a year, based on estimates of a 5% increase in collections on loans charged-off due to bankruptcy. "We certainly support passage of the bankruptcy bill because we think it's the right thing for consumers," Donahue told The Credit Union Journal.
Throughout the five-year legislative campaign the Delaware credit card bank has maintained a low-profile, even as it has taken a leading role in lobbying Congress and providing millions of dollars in campaign contributions to help reach lawmakers.